Europeans Unhappy Over High American Capital Standards


The Fed has adopted rules that require foreign banks operating in the US to maintain the same capital standards as US banks. German bankers are unhappy about this:

In comments prepared for a speech in Berlin Monday, Andreas Dombret said that recent U.S. regulatory initiatives, “such as the enhanced standards for bank holding companies and foreign banking organizations, worry me. They seem to contradict the need for international cooperation.”

….The Fed recently approved new rules that force the largest international banks operating in America to establish U.S.-based “intermediate holding companies,” which will be subject to the same capital and liquidity requirements as domestic banks….European bankers have sharply criticized the move. “This is a considerable competitive handicap for European banks, as their U.S. competitors aren’t subject to any equivalent requirements in the EU,” said Michael Kemmer, head of the Association of German Banks last month.

Well, in that case, I recommend that the EU raise its capital standards and then subject American banks to it. Instead, last month they decided to ease leverage standards. I guess they’ve already forgotten what things looked like back in 2010. In case you have too, the chart on the right tells the story.

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DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

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